Excerpt from MarketWatch
Rally convinces some top performers
By Peter Brimelow, March 26, 2009
NEW YORK (MarketWatch) — You may be rattled by the roiling rally, but two top-performing letters have just extended diplomatic recognition to it.
Cabot China & Emerging Market Report, 90% in cash, has just gone bullish. CCEMR dominated the Hulbert performance rankings for several years until the crash began. (See Dec. 7, 2008 column.)
And it’s down only (!) 26.71% over the last 12 months, compared to negative 43.32% for the total return of the DJ-Wilshire 5000. (Well?)
CCEMR combines stock-picking with a disciplined technical market timing system based on moving averages, which it calls its “China-Timer.”
In a bulletin earlier this week, it announced: “The Halter Usx China Index has been above its 25- and 50-day moving averages for seven trading sessions, and the lower average has just turned up. That gives us an official buy signal from the Cabot China-Timer!”
CCEMR is still cautious though. It continued: “New buy signals are vulnerable to sudden market movements, so we won’t be piling into the stocks on our Watch List with both feet. At least not yet.”
But it does recommend Shanda Interactive Entertainment Ltd. (SNDA).
CCEMR remarked recently that China’s gross domestic product is about half that of the U.S., which makes its announced “stimulus package” proportionately larger (and earlier implemented).
I still don’t think anyone really knows what’s going on in China. But maybe it’s now big enough to pull the world economy out of recession.
More good news: When I looked last week, CCEMR’s conservative but top-performing sister, the Cabot Market Letter, seemed close to endorsing the rally. (See March 16 column.)
Last night, it did, in a new issue headlined “DON’T FIGHT THE FED; DON’T FIGHT THE TAPE.”
Its short- and medium-term indicators have turned positive.
Cabot is now 25% invested, buying three stocks that I politely won’t name until its subscribers have had their chance. (But one is a gold mine.)
However, Cabot also added new stocks to its “Watch List.” They may (or may not) be bought as the rally continues.